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WE SHOULD LEARN FROM EXPENSIVE LESSONS

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WE SHOULD LEARN FROM EXPENSIVE LESSONS

Will anything, short of another 9-11, stop this market? The damn thing just keeps going up. Well, tomorrow (Friday) we're due for a rest. The last two days, the indexes have started the day lower and, later in the day, buyers come in to prop up a market that wants to come down to test support. There are no particular resistance levels. The SPX and RUT seem to be making new highs every day.

On Tuesday we put on another position for April - an OEX 630/620 bull put spread. Well over 1,000 contracts were traded. We didn't take in a lot of premium - simply because there isn't a lot out there. But, $.45 is better than nothing.

Those who missed out on Tuesday had plenty of opportunity to enter the position on Wednesday and today as well. Some wise CPTIers had the presence of mind to take advantage of a morning pullback to put on the 625/615 bull put spread for the same $.45 premium. Hey, that extra five points of cushion might come in handy - if we get that steep correction some of the talking heads have been predicting for a while now.

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Mike -- I started getting serious about consistently trading spreads about last October. I learned a whole lot about the OTM, High Probability trades from following you and your emails and website. The consistency appealed to me.

When you say "don't get greedy," - I want to let you know I already did that and learned!!!

I started out and made blunders through last Summer, figured a few things out and broke even a couple of months, then I started having good results:

October Expiration Net $3,530
November Expiration Net $4,195
I thought, "Damn, I'm good," then . . .

I loaded up in December for January expirations, booked $14,000 in credits (counting it like it was my money) with spreads and naked puts.... It's going to be a great Christmas, right? Not!!!!!!!!!!! Things started going south and I finished January expiration with a net of $866. It could have been worse. I thought, "where did it all go!?!" I actually got whipsawed by a few volatile moves on some stocks that I had spreads in and exited too late on some trades.

In a way, that was the best thing for me, in the long run. It helped me get more disciplined in planning for exits on trades, before I jump in, so there is little emotion anymore. I just read the charts, do the numbers and execute like a trained robot. It's not as exciting, but it works a lot better. I have more rigid rules that I now follow, no matter what!

"The learning is in the doing." You can hear all the warnings that people spout, but until you've been to the war, you don't really know much about survival. My wife and I plan to attend one of your seminars in the future. Best Regards - Ken

Hi Ken - I'm glad you're learning, and profiting from, my columns. Experience is also a great teacher - as are my seminars. You escaped a potentially dangerous (and costly) situation with a profit. Usually it takes a substantial loss for a lesson to really stick.

I look forward to you attending my seminar. Hopefully, you'll learn that using our strategies on individual stocks is taking additional risks. Also, that naked puts can come back to bite you in the ass if you're not careful. Our trades aren't meant to be exciting - just profitable. Keep up the good work - and keep that self-discipline handy.

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A Little Support & Resistance
S&P 500: Closed at 1456.38
Resistance:
1462 is the upper band of the current channel
1475 from peaks in December 1999 and January 2000

Support:
The 10 day EMA at 1452
1444 from February 2000
1440 is the mid-January high
1438 is the late November to February up trendline
1432 is the December 2006 high
The 50 day EMA at 1429
1425 is an interim high from November 1999
1408 is the November high

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Washington Seminar is SOLD OUT!! Three Spots Open For Dallas

Yesterday the last Washington spot was reserved. There are no longer spots for the Washington DC seminar. There are still three for Dallas. It's an experience you'll not forget and the knowledge will last a lifetime. What are you waiting for?

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CURRENT MARCH CPTI PORTFOLIO POSITIONS
CPTI March Position #1 - RUT - Iron Condor - 829.44
We sold 20 March RUT 700 puts and bought 20 March RUT 690 puts for a credit of $.65 ($1,300). Then, on 1/25, we sold 20 March RUT 850 calls and bought 20 RUT 860 calls for a net credit of $.45 ($900). Our net credit and profit potential is $1.10 ($2,200).

CPTI March Position #2 - OEX - Bull Put Spread - 667.22

We sold 20 March OEX 620 puts and bought 20 March 610 puts for a credit of $.45 ($900). Maintenance is $20,000. We'll keep watch for an appropriate bear call spread to complete our potential Iron Condor.

CPTI March Position #3 - SPX - Iron Condor - 1456.38

We sold 12 March SPX 1335 puts and bought 12 March 1320 puts for a credit of $.65 ($780). Then we sold 10 March 1490 calls and bought 10 March 1505 calls for a credit of $.80 ($800). Total net credit is $1,580. Maintenance is $18,000 - IF you have the right broker.

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CURRENT APRIL CPTI PORTFOLIO POSITIONS
CPTI April Position #1 - RUT - Bull Put Spread - 829.44
We sold 20 April RUT 720 puts and bought 20 April RUT 710 puts for a credit of $.45 ($900). Our potential profit is $900. Maintenance is $20,000. We'll be watching for an opportunity to complete the Iron Condor.

CPTI April Position #2 - OEX - Bull Put Spread - 667.22

We sold 20 April OEX 630 puts and bought 20 April OEX 620 puts for a credit of $.45 ($900). Our potential profit is $900. Maintenance is $20,000.

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ONGOING STRATEGY - THE ZERO-PLUS Strategy
In the past, I outlined a strategy based on an initial investment of $100,000. At that time, $74,000 was spent on zero coupon bonds maturing in about seven years at a value of $100,000. The principal $100,000 investment is guaranteed. We're trading the remaining $26,000 to generate a "risk free" return on the original investment. We are not compounding our profits by dramatically increasing the number of contracts we trade. We have now generated $52,425 ($51,050 + $1,375).

ZERO PLUS POSITION -

Our February RUT bull put spread expired 100% worthless. We pocketed $1,375. I'll be looking for an April position and announce it in the near future.

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CPTI SEMINAR SCHEDULE!
Dallas, TX - March 10 & 11

Washington, DC - April 21 & 22

Take your trading from a "hobby" to a potentially profitable "business." You need the information you'll learn at my CPTI seminar. You'll learn more than the "how to's" of trading our strategies. You'll learn a new lifestyle - one that can last a lifetime.

DO YOU HAVE PROFIT-ABILITY?
It's always a challenge (and a pleasure) for me when I have a roomful of bright people who have a passion for, and are excited about, learning. We go over everything imaginable - from the non-directional strategies to the psychology of trading. We cover a lot more than the mechanics. Inquiring minds want to know the whens and the whys, not just the hows. That way, they're prepared for the best (and the worst) - and know the best way to handle either situation. Contact me and I'll personally call you with all the details.

If you're a SERIOUS options trader, and you want to learn the nuances of our advanced non-directional trading strategies and hone your trading skills, contact me ASAP at mparnos@optioninvestor.com. I'll call you with all the pertinent information. The price is a bargain - ONLY $995.00 -- less than the profit from one Iron Condor trade -- and you'll have a two-day experience that you'll remember, and profit from, for a lifetime. Our CPTI seminars are limited to ONLY 25 ATTENDEES. Remember, if you attend one of my CPTI seminars, you are entitled to RETAKE the seminar a SECOND TIME at NO CHARGE!

48 OUT OF 51 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITHOUT STRESS?
OF COURSE YOU DO!!
USE OUR CPTI WEALTH-BUILDING TECHNIQUES!

You should definitely attend one of my seminars, if you can. With what you learn, you'll see a substantial increase in your trading results. Contact me at: mparnos@optioninvestor.com. If you've already signed up, I'll see you there. If you haven't signed up, what are you waiting for?

Note to the hundreds of former CPTI seminar graduates: There are no free retake spots remaining for Dallas or for Washington, DC. He who hesitates . . . is SOL.

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HAPPY TRADING!
Remember the CPTI credo: Our remote batteries and self-discipline should last forever, but mierde happens. Be prepared! In trading, as in life, it's not the cards we're dealt. It's how we play them.
MIKE PARNOS, Your Options Therapist and CPTI Master Strategist

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Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.

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